Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Energy Recovery (NASDAQ: ERII) and the best and worst performers in the water infrastructure industry.

Trends towards conservation and reducing groundwater depletion are putting water infrastructure and treatment products front and center. Companies that can innovate and create solutions–especially automated or connected solutions–to address these thematic trends will create incremental demand and speed up replacement cycles. On the other hand, water infrastructure and treatment companies are at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings.

The 5 water infrastructure stocks we track reported a satisfactory Q2. As a group, revenues missed analysts’ consensus estimates by 6.4%.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 16.5% since the latest earnings results.

Energy Recovery (NASDAQ: ERII)

Having saved far more than a trillion gallons of water, Energy Recovery (NASDAQ: ERII) provides energy recovery devices to the water treatment, oil and gas, and chemical processing sectors.

Energy Recovery reported revenues of $12 million, down 57.2% year on year. This print fell short of analysts’ expectations by 36.3%. Overall, it was a softer quarter for the company with a significant miss of analysts’ EBITDA estimates.

Energy Recovery delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. The market seems disappointed with the results as the stock is down 24.3% since reporting and currently trades at $6.71.

Read our full report on Energy Recovery here, it’s free.

Best Q2: Watts Water Technologies (NYSE: WTS)

Founded in 1874, Watts Water (NYSE: WTS) specializes in manufacturing water products and systems for residential, commercial, and industrial applications globally.

Watts Water Technologies reported revenues of $763.2 million, up 18.6% year on year, outperforming analysts’ expectations by 4.9%. The business had a stunning quarter with a solid beat of analysts’ organic revenue and EPS estimates.

Watts Water Technologies scored the biggest analyst estimate beat and fastest revenue growth among its peers. Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 1.1% since reporting. It currently trades at $359.88.

Is now the time to buy Watts Water Technologies? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: Tennant (NYSE: TNC)

As the world’s largest manufacturer of autonomous mobile robots, Tennant (NYSE: TNC) designs, manufactures, and sells cleaning products to various sectors.

Tennant reported revenues of $324 million, up 1.7% year on year, falling short of analysts’ expectations by 1.7%. It was a softer quarter as it posted full-year EBITDA guidance missing analysts’ expectations.

As expected, the stock is down 23.5% since the results and currently trades at $66.77.

Read our full analysis of Tennant’s results here.

Xylem (NYSE: XYL)

Formed through a spinoff, Xylem (NYSE: XYL) manufactures and services engineered products across a wide variety of applications primarily in the water sector.

Xylem reported revenues of $2.34 billion, up 1.5% year on year. This result met analysts’ expectations. It was a strong quarter as it also put up an impressive beat of analysts’ EBITDA estimates and full-year EPS guidance slightly topping analysts’ expectations.

The stock is down 15.2% since reporting and currently trades at $101.87.

Read our full, actionable report on Xylem here, it’s free.

Mueller Water Products (NYSE: MWA)

As one of the oldest companies in the water infrastructure industry, Mueller (NYSE: MWA) is a provider of water infrastructure products and flow control systems for various sectors.

Mueller Water Products reported revenues of $395.9 million, up 4.1% year on year. This number surpassed analysts’ expectations by 1.2%. Overall, it was a very strong quarter as it also produced a beat of analysts’ EPS and EBITDA estimates.

Mueller Water Products had the weakest full-year guidance update in the group. The stock is down 18.6% since reporting and currently trades at $21.51.

Read our full, actionable report on Mueller Water Products here, it’s free.

Market Update

Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership.

Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products.

By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals.

Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.